1. Module 5 Raising Capital

2. Module 5 Topics Review Making the Argument Valuation Case Study

3. Review Sources of Capital Start-upSpouse Friends/Family Lending Institution Other GrowthAngel Investors Venture Capitalists Business Profits Public MarketPublic Investors

4. Raising Capital Making a Convincing Argument Match Argument with Funder http://edcorner.stanford.edu/authorMaterialI nfo.html?topicId=6&mid=1373 (3 minutes)

5. Raising Capital RequiredCredibility and Reliable Good Business Plan Realistic Financial Statements Matching PerspectiveEquity Investors vs Lenders

6. Life Cycle Financing Revenue Public Markets Private Placement Rapid Bridge Capital Growth Firm Venture Capital Firm Venture Capital Angel Capital Personal SavingsSlow Friends/FamilyGrowth Financial InstitutionsFirm Time

7. Cash Budget Example Pre Start Month 1 Month 2 Month 3 Revenue0400060008000 Cost of Goods 1000200030004000 Operating Profit (1000)200030004000 Insurance500 Wages1000100010001000 Equipment10000 Computer1500 Advertising500500500500 Legal500 TOTAL16000150015001500 CHANGE(1700)250025002500 BEGINNING CASH 17000025005000 Ending Cash 0250050007500

8. Financial Forecasts Used for planning and funding requests Must be credible Ending cash can’t be negative Scenarios Contingencies

9. Additional Comments Cash is most important Positive cash flow = happiness Cash sooner is preferred to cash later Entrepreneurs often lack financial skills Developing financial strategies critical

10. Science and Art of Valuation What affects value? Cash flow TimeRisk

11. Science and Art of Valuation Liquidation Value Book Value Market Value Earnings

12. Crafting the Argument Firm performance/accomplishments Risk Exposure Growth and return potential Stage of development Amount of capital needed Goals

13. Case Study What do you recommend?